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1919 

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Copyright  International  Film  Service,  Inc. 


The 

Hybrid  Economic 
Situation 


ADDRESS  OF 

HERBERT  HOOVER 


BEFORE  THE 

SAN  FRANCISCO  COMMERCIAL  CLUB 
OCTOBER  9, 1919 


Iritr6du5t6ryremaft(s  of  MR.  FREDERICK  WHITTON 
president  of  SAN  FRANCISCO  COMMERCIAL  CLUB 


E  ARE  meeting  today  with  a  man  who  has  been  in  the  war  from 
the  beginning.  At  the  first  alarm  his  service  began,  and  not  for  nearly 
a  year  after  the  armistice  was  he  able  to  throw  off,  even  briefly, 
the  heavy  burden  of  his  world  duties.  There  is  no  other  man,  cer- 
tainly no  other  American,  of  whom  that  can  be  said.  He  stands 
alone  in  a  world  of  men. 

There  is  something  inevitably  trifling  and  tinkling  in  the  effort 
among  the  few  of  us  here  today  to  put  into  words  the  thoughts  that 
are  in  our  minds  toward  our  guest,  for  we  are  conscious  that  he  is 
known  and  loved  by  millions.  In  uncounted  languages  the  prayers  of 
little  children  go  up  for  Him  as  greater  and  more  dear  than  any  army 
chief  or  king  or  saint.  And  yet,  unavailing  and  ineffective  as  it  is,  we 
must  express  to  Mr.  Hoover  something  of  the  thought  that  we,  who 
live  in  America,  hold  for  him.  (Applause.) 

We  rejoice  in  him  as  a  Californian.  We  exult  in  him  as  a  great 
American  —  among  the  greatest.  But  together  with  that  exultation 
and  that  rejoicing  there  is  a  deeper  and  a  greater  feeling  —  a  recogni- 
tion, may  I  say,  solemn  and  deeply  moving,  that  in  him  we  have  one 
of  history's  great  figures,  one  of  those  rare  and  radiant  few  whose 
feet  are  upon  the  heights,  and  whose  names  are  written  among  the 
stars.  For  it  has  been  his  work  to  ennoble  humanity,  and  to  give  to 
human  life  something  of  that  spirit  and  essence  which  links  it  with 
the  divine.  (Applause.) 

Only  a  great  poet  can  phrase  Herbert  Hoover.  Kipling  must  have 
had  in  mind  such  a  man  as  he  when  he  said: 

"If  you  can  dream  and  not  make  dreams  your  master; 

If  you  can  think  and  not  make  thoughts  your  aim; 

If  you  can  meet  with  triumph  and  disaster, 

And  treat  those  two  imposters  just  the  same; 

If  you  can  talk  with  crowds,  but  keep  your  virtue, 

Or  walk  with  kings  nor  lose  the  common  touch; 

If  neither  foes  nor  loving  friends  can  hurt  you; 

If  all  men  count  with  you,  but  none  too  much; 

If  you  can  fill  the  unforgiving  minute, 

With  sixty  seconds'  worth  of  distance  run, 

Tours  is  the  earth  and  everything  that's  in  it, 

And  which  is  more,  you'll  be  a  man" 


[4] 


i  Y  r 

of  MR.  HERBERT  HOOVER    <^  , 


R.  CHAIRMAN  AND  GENTLEMEN: 
I  would  be  a  poor  mind  if  I  were  not 
greatly  embarrassed  at  this  moment.  To 
merit  the  title  of  a  great  Californian  would 
be  merit  beyond  that  that  could  be  con- 
ferred in  any  community  in  this  world,  because  there  is 
no  community  of  the  intelligence  and  character  of  this 
State  of  California.  After  what  we  have  heard,  it  is  per- 
haps a  little  difficult  to  come  down  to  the  subject  that  I 
have  chosen  to  worry  you  with  for  a  moment  today.  It  is 
not  the  League  of  Nations.  (Laughter.) 

It  has  been  my  duty,  especially  during  the  last  ten 
months,  to  make  a  systematic  study  of  certain  social 
and  economic  currents  throughout  the  world,  in  order 
that  those  gentlemen  engaged  in  an  endeavor  to  make 
peace  could  be  as  well  advised  as  possible.  I  have  re- 
tained some  of  the  notes  made  on  those  occasions,  and  I 
have  thrown  a  few  of  them  together  with  the  hope  that 
perhaps  it  might  be  of  some  assistance  to  you  in  formu- 
lating your  own  minds  about  certain  problems  with 
which  this  country  is  confronted. 

In  entering  upon  a  discussion  of  some  issues  in  the 
world's  economic  situation  I  wish  to  make  an  immediate 
differentiation  in  two  widely  separated  economic  phe- 

[s] 


^Address  ofM.R.  HERBERT  HOOVER 

nomena  today.  That  lies  in  the  difference  of  the  eco- 
nomic situation,  of  the  agricultural  populations  of  the 
world,  as  distinguished  from  the  industrial  populations 
— -and  in  the  industrial  population,  for  lack  of  a  better 
term,  I  include  the  production  of  non-agricultural  raw 
material,  manufacturing  and  transportation  generally — 
that  is,  chiefly,  those  agencies  concerned  with  paid 
labor.  That  is,  in  the  main,  a  division  of  town  and 
country.  Practically  all  of  the  worst  of  our  economic  and 
social  ills  today  center  in  the  towns. 

Now  any  casual  survey  of  the  world's  economic  situa- 
tion at  this  moment  will  display  two  extraordinary — 
perhaps  not  extraordinary  but  two  very  pertinent  facts. 
One  of  them  is  the  depth  to  which  production  has 
>^/dropped  in  industry,  and  the  other  is  the  volume  to 
which  production  has  increased  in  agriculture.  The  in- 
dustrial classes  all  over  the  world  have  slackened  effort; 
the  agricultural  classes  all  over  the  world  have  redoubled 
their  efforts. 

I  wish,  first,  to  deal  a  moment  with  the  industrial  sit- 
uation. I  take  it  that  there  is  one  thesis  on  which  every 
business  man  and  every  economist,  no  matter  what  the 
bent  of  his  mind,  can  agree — and  that  is,  "That  the  very 
foundation  of  the  maintenance  and  the  improvement  in 
the  standard  of  living  lies  in  securing  the  maximum  pro- 
ductivity of  the  human  being." 

It  follows  from  this  that  the  maximum  productivity 
cannot  be  obtained  without  the  elimination  of  waste. 
It  further  follows  that  the  application  of  such  a  proposi- 

[6] 


"The  World  Economic  Situation" 

tion  must  stand  several  tests,  and  the  principal  one  of 
these  is  that  the  maximum  production  can  only  be  ob- 
tained under  conditions  that  protect  and  stimulate  the 
well-being  of  the  individual  producer. 

Now,  the  causes  of  the  present  decreased  productivity 
are  to  some  extent  the  same  throughout  the  world. 
There  was  a  great  mobilization  of  industry  during  the 
war  on  new  lines  of  endeavor.  There  was  a  new  distribu- 
tion of  commodities,  and  a  distorted  purpose  in  com- 
merce. With  the  cessation  of  hostilities  a  large  part  of 
the  industries  of  the  world  have  had  to  be  redirected 
back  to  peace  work,  and  there  has,  of  necessity,  been 
some  disruption  in  production. 

The  struggle  for  political  rearrangements  during  the 
armistice  has  had  a  stifling  effect  on  production.  We 
have  to  bear  in  mind  that  five  old  empires  have  been 
split  into  twenty  different  states.  The  old  empires  were, 
each  of  them,  economic  units,  and  we  thus  have  them  j 
broken  into  twenty  economic  fragments,  and  the  result  I 
could  not  be  other  than  a  decrease  in  production. 

There  has  been  a  physical  exhaustion  of  a  large  sec- 
tion of  the  population,  particularly  in  Europe.  Privation 
from  war,  and  under-feeding,  all  have  contributed  to 
create  a  great  reflex  against  renewed  exertion. 

To  a  minor  degree,  considering  the  whole,  there  has 
been  a  destruction  of  equipment  and  tools.  There  has 
been  some  loss  of  organization  and  skill,  due  to  diversion 
to  war. 

The  delay  in  peace  has,  particularly  in  Europe,  de- 

[7] 


^Address  of  MR.  HERBERT  HOOVER 

layed  the  import  of  raw  materials,  for  until  peace  is 
made  credits  cannot  be  arranged  and  factories  cannot 
be  reopened.  Europe  has  exhausted  practically  the 
whole  of  its  movable  securities.  It  must  borrow  working 
capital  with  which  to  secure  raw  material  and  that  work- 
ing capital  cannot  be  available  until  we  have  peace. 

There  is  also  a  large  factor  in  the  social  ferment  that 
arises  primarily  out  of  the  necessity  of  economic  re- 
adjustment of  wages  in  an  endeavor  to  continually  meet 
the  rise  in  prices  that  are  themselves  the  result  of  the 
vicious  circle  of  inflation  in  money  and  credits  during 
the  war. 

There  is  a  further  note  in  all  this  turmoil  and  tumult, 
and  that  is  the  insistent  demand  of  labor  for  higher 
standards  of  living  and  a  voice  in  the  administration  of 
its  own  effort.  Unfortunately,  these  demands  have,  in 
many  places,  become  impregnated  with  notions  of 
socialism,  this  being  believed  by  many  millions  of  people 
as  the  panacea  for  all  ills;  and  in  some  countries  also, 
labor  has  become  infected  with  the  notion  that  it  in- 
creases the  total  sum  of  labor  as  it  limits  the  effort  of  the 
individual.  Thus  we  have  the  demand  for  a  six-hour  day. 

From  all  these  causes,  accumulating  in  different  coun- 
tries in  different  intensity,  there  is  one  essential  fact,  and 
that  is  that  the  industrial  productivity  of  the  world  has 
reached  so  low  an  ebb  that  nothing  but  political  and 
moral  economic  chaos,  finally  interpreting  itself  into  a 
loss  of  life  on  a  scale  hitherto  undreamed  of,  is  upon  us, 

unless  constructive  measures  can  be  set  up  by  which  the 

<    \> 

[8] 


"The  World  economic  Situation" 

world,  and  more  particularly  Europe,  is  to  return  to 
work. 

Some  items  in  the  present  situation  illustrate  the  ex- 
tent to  which  productivity  has  fallen.  An  inquiry  which 
I  carried  out  in  the  month  of  August  showed  that  there 
were  fifteen  million  families  receiving  unemployment 
allowances  in  Europe — practically  a  population  of  sev- 
enty-five millions  being  carried  on  charity  by  govern- 
ments, and  being  paid  almost  wholly  by  the  sheer  issue 
of  paper  currency. 

The  coal  consumption  of  Europe  had,  on  the  first  of 
August,  fallen  to  a  rate  of  450,000,000  tons  per  annum, 
as  compared  with  690,000,000  tons  pre-war,  and  600,- 
000,000  tons  at  the  day  of  the  armistice. 

Taking  Europe  as  a  whole,  of  the  population  of  about 
450,000,000,  something  less  than  350,000,000  can  be 
supported  on  their  own  soil.  Approximately  one  hundred 
millions  of  these  people  must  live  by  the  manufacture 
and  marketing  of  products  of  their  labor  to  other  coun 
tries,  in  exchange  for  their  food.  It  is  a  sinister  fact  that- 
the  people  today  being  supported  on  unemployment 
allowances  practically  represent  the  surplus  population 
of  Europe.  Before  the  war  these  whole  masses  of  popula-*-^ 
tion  produced  from  year  to  year  only  a  small  margin  of 
commodities  over  and  above  their  necessary  consump- 
tion and  the  amounts  they  required  for  their  exchange 
abroad  for  vital  necessities.  It  is  true  they  managed 
to  support  armies  and  navies,  that  they  had  a  class  of 
non-producers,  and  that  they  did  gain  slightly  in  in- 

[9] 


^Address  of  MR.  HERBERT  HOOVER 

ternal  improvements  and  investments  abroad;  but  all 
these  surpluses  were  obtained  at  the  cost  of  a  danger- 
ously low  standard  of  living. 

More  particularly  was  this  true  in  the  case  of  Great 
Britain  where  the  largest  volume  of  British  production 
was  undoubtedly  secured  at  a  fearful  cost  in  the  stand- 
ard of  living  and  the  ultimate  physical  demoralization 
of  an  industrial  population. 

Now,  in  pre-war  days,  Europe  had  the  advantage  of 
the  enormous  stimulus  of  individualism.  It  had  also  the 
advantage  of  great  economic  discipline;  and  during  the 
war  the  patriotic  impulse  to  production  and  a  reduction 
in  consumption  carried  them  on  in  spite  of  the  diversion 
of  men  to  war  and  munitions.  But  during  the  war  great 
promises  were  held  out  in  every  country  of  Europe  as  to 
economic  betterment  with  peace.  With  the  cessation  of 
hostilities  the  patriotic  stimulus  of  war  towards  pro- 
duction was  lost,  and  an  insistent  demand  for  economic 
change  came  from  every  quarter,  with  the  armistice. 

Now  this  social  ferment  is  the  most  difficult  problem 
in  front  of  the  whole  world.  It  grows  fundamentally  out 
of  a  yearning  for  higher  standards  of  living,  demand  for 
economic  change  in  the  status  of  labor,  and  in  Europe 
for  a  greater  equality  of  opportunity,  or,  to  phrase  it  in 
another  way,  for  a  better  division  of  the  products  of  in- 
dustry. In  very  large  areas  this  has  resulted  in  actual 
revolution  and  the  imposition  of  radical  ideas;  and  in 
other  areas  it  has  taken  a  milder  form  of  demands  for 
nationalization  of  certain  industries.  The  economic  im- 

[10] 


"The  World Sconomic  Situation" 

pulse  of  the  French  Revolution  of  a  century  and  a  half 
ago  was  a  better  division  of  the  land.  The  economic  im- 
pulse of  these  revolutions  that  we  have  had  in  the  last     VA 
two  years  is  for  a  better  division  of  the  products  of 
industry. 

It  is  to  be  noted  that  these  two  movements  are  not 
from    the    agricultural    classes;   that    they    are    town   ^ 
phenomena. 

Now,  all  this  ferment,  whether  it  is  in  the  form  of  de- 
mands for  an  equalization  of  wage  with  the  cost  of  liv- 
ing, or  whether  it  is  in  the  form  of  restriction  of  individ- 
ual output  in  an  endeavor  to  increase  the  total  volume 
of  employment,  or  whether  it  is  in  the  nature  of  sociali- 
zation with  the  hallucination  that  men  will  work  for 
altruism  alone,  or  whether  it  takes  the  form  of  strikes  or 
lockouts,  or  whether  it  takes  any  other  form — all  have 
one  concrete  result,  and  that  is  that  we  have  a  decreased 
productivity  that  has  placed  all  Europe  in  jeopardy  and 
that  has  come  to  invade  this  country. 

These  phenomena  until  recently  had  not  penetrated 
the  United  States  to  any  great  degree,  but  no  man  can 
say,  in  the  face  of  the  enormous  strikes  that  we  are  con- 
fronted with,  that  we  are  at  all  free  from  the  Europeani-\ 
zation  of  the  United  States.  There  will  be  no  use  of  tears/ 
over  rising  prices  if  our  productivity  maintains  its  present 
level,  for  rising  prices  are  simply  the  visualization  of  in-  v 
sufficient  production.  When  production  breaks  down 
prices  must  rise,  and  the  richer  are  supplied  and  the 
poorer  do  without.  Right  here  is  the  origin  of  class  dis- 


^Address  of  MR.  HERBERT  HOOVER 

tinctions  and  the  origin  of  violence.  We  want  no  classes 
in  this  country;  we  wish  to  maintain  the  equality  of 
opportunity  which  we  now  have  and  the  opportunity  for 
every  man,  by  exertion,  to  participate  in  all  that  we 
possess. 

This,  to  my  mind,  is  the  primary  and  pressing  prob- 
lem of  this  moment,  and  the  first  step  in  its  solution  is  to 
get  peace.  Peace,  is,  however,  but  a  single  step,  and  the 
fundamental  fact  is  that  the  world  is  producing  less  in- 
dustrial material  than  it  requires  to  maintain  its  total 
population.  Therefore,  the  business  of  the  whole  world — 
the  business  of  every  thinking  man — is,  as  soon  as  it  can 
j  dispose  of  this  incidental  question  of  peace,  to  find  some 
solution  of  the  much  greater  problem  that  we  are  con- 
fronted with.  There  is  no  royal  road  to  its  solution. 
There  is  no  bright  intellectual  formula  that  will  end  all 
this  kind  of  trouble.  The  beautiful  formulae  of  Bolshe- 
vism and  Socialism  have  already  wrecked  themselves  on 
the  rock  of  production.  For  such  reduced  production 
they  have  caused  the  death  and  misery  of  millions  of 
people.  They  have  been  abandoned  even  by  their 
leaders.  We  need  some  definite  substitute,  some  plan  for 
solving  this  problem.  The  solution  must  be  found  by 
Americans  in  the  practical  American  way,  based  upon 
American  ideas,  on  American  philosophy  of  life.  And, 
further,  it  must  be  founded  upon  our  own  national  in- 
stincts, and  in  harmony  with  our  own  national  institu- 
I  tions.  It  cannot  be  founded  by  creating  class  feeling  of 
[workers  and  capitalists.  Unless  we  can  find  such  a  plan 

[12] 


.     "  The  World  economic  Situation  " 

we  shall  be  subjected  to  the  disintegrating  theories  of 
Europe.  We  have  gone  far  apart  from  Europe;  we  lead 
Europe  in  every  social  and  moral  aspect  by  fifty  years. 
,It  is  for  us  to  lead  in  this  problem,  also. 

It  appears  to  me  that  any  solution  of  this  problem 
must  go  deeper  than  questions  of.  strikes,  lockouts  or 
arbitration,  for  these  presuppose  a  conflict  of  interest. 
We  have  got  to  go  sooner  or  later  to  the  root  of  this 
difficulty.  There  is  no  solution  short  of  community  of 
interest.  We  must  begin  by  creating,  somehow  and  *? 
somewhere,  a  solidarity  of  interest  in  every  section  of  the 
people  conducting  our  industrial  machine.  The  worker, 
the  administrator  and  the  employer  are  absolutely  inter-  4 
'  dependent  on  one  another  in  this  task  of  securing  the 
maximum  production  and  a  better  division  of  its  results. 
It  is  hopeless  to  secure  a  solution  if  we  are  to  set  these1 
people  up  as  different  classes  fighting  with  each  other. 
Maximum  production  must  be  founded  on  the  maxi- 
mum exertion  of  every  individual  within  his  physical 
ability,  and  upon  the  reduction  of  waste,  not  only  in-j 
dividual  but  national.  Unless  we  are  going  to  secure  this 
maximum  production  through  the  combined  effort  and 
intelligence  of  our  entire  economic  machine,  we  will  have 
destroyed  the  very  foundations  upon  which  we  build  the 
higher  activities  of  life. 

One  of  the  most  important  actions  taken  by  our  Pres- 
ident was  the  summoning  of  the  Industrial  Conference 
at  Washington.  If  that  conference  can  evolve  some 
method  by  which  we  can  obtain  industrial  peace,  it  will 

[13] 


^Address  of  MR.  HERBERT  HOOVER 

f 

have  done  more  for  the  world  in  the  next  two  years  than 

;  the  League  of  Nations  can  possibly  do  during  the  same 
time. 

In  the  last  seventy-five  years  industry  has  developed 
into  large  units.  We  have  in  a  great  degree  lost  the 
interest  of  the  individual  worker  in  the  produce  of  his 
hands.  In  the  specialization  of  industry  we  have  dulled 
the  worker  by  intense  production  without  giving  him 
any  other  interest,  and  we  have  widened  the  space  be- 
tween the  employer  and  the  employee.  We  have  de- 
stroyed all  the  old  intimacy  between  the  employer  and 
the  employed,  which  bore  within  it  mutual  responsi- 
bility. So  we  must  search  deeper  for  a  solution  than  lies 
in  mere  superficial  agreement,  if  we  are  to  find  an  end  of 
this  constant  struggle.  We  must  find  in  the  relationship 
of  employer  and  employee  some  common  bridge  of 
actual,  individual,  self-interest  in  the  maintenance  of 
production  and  the  elimination  of  waste.  We  must  have 
a  contribution  on  both  sides  of  their  full  energy,  their 
full  intelligence,  and  their  full  responsibility.  To  do  this, 
we  must  secure  a  better  basis  of  distribution  of  the  re- 
sults from  labor,  from  skill  and  intelligence,  if  we  are 
going  to  secure  this  larger  interest  in  production. 

Now  the  human  race  has  increased  its  standard  of 
productivity  and  therefore  its  standard  of  living, 
through  a  thousand  years  of  growth  of  an  extremely 
intricate  organization  of  production  and  distribution. 
This  organization  contains  within  itself  a  great  stimula- 
tion to  skill,  to  invention  and  to  industry.  We  cannot 


"The  World Sconomic  Situation" 

maintain  the  production  which  we  now  have  by  the 
destruction  or  sudden  disturbance  of  this  delicate  organ- 
ization. The  margins  upon  which  the  human  race  is  liv- 
ing today  are  too  small  to  warrant  a  drop  of  only  ten  per 
cent,  in  our  productivity.  The  maximum  production 
does  not  lie  in  the  abandonment  of  the  individual  reward, 
for  effort  and  intelligence.  It  lies  in  a  proper  stimulation 
of  these  qualities  of  skill  and  effort,  and  their  stimulation  -; 
by  the  only  stimulant  that  is  constant  in  the  human  ; 
character,  and  that  is,  his  own  self-interest. 

I  mentioned  the  question  of  waste,  and  THo  not  mean     J./ 
alone  the  waste  of  strikes  and  of  unemployment  and  the 
lack   of  interest  in   labor,   but   also  national  wagte^ "  ^ 
National  waste  contributes  to  decrease  the  efficiency  of         ^  i 
the  entire  industrial  machine  and  thus  to  decrease  the 
available  commodities  for  distribution.  We  have  in  this 
country  a  government,  the  administrative  organs  of 
which  we  set  up  before  we  had  gained  our  complex  eco- 
nomic organization,  and  we  further  distorted  that  gov- 
ernment by  the  measures  we  were  compelled  to  take  in 
war  time.  There  lies  a  wide  field  for  adjustment  in  our 
present  processes,  both  as  to  taxes,  to  expenditure,  to 
our  railways  and  a  control  of  dominant  enterprises,  and 
to    the    actual    administration    of    the    government 
generally.  + 

I  have  no  panacea  for  any  of  these  problems.  I  believe   \rfp 
that  these  are  the  lines  of  advance.  This  requires  that 
the  constructive  devotion  of  the  officials  of  this  country 
and  the  intelligence  of  the  entire  people  should  be 


^Address  of  MR.  HERBERT  HOOVER 

directed  to  these  issues,  instead  of  to  issues  that  are  now 
exhausted  and  are  practically  accepted. 

Agriculture  has  had  but  a  minor  penetration  of  these 
difficulties  that  permeate  the  town  populations.  It  was 
never  so  prosperous  nor  in  so  high  a  state  of  productivity 
as  today.  Even  in  Europe,  there  is  not  an  acre  for  which 
seed  could  be  obtained,  or  agricultural  implements 
found,  that  has  not  been  planted.  The  food  situation  in 
the  world  today  is  therefore  not  a  question  of  supply. 
There  are  ample  supplies  of  the  most  essential  commod- 
ities to  feed  the  whole  of  civilization  until  the  next 
harvest.  The  problems  of  this  division  of  life  are,  there- 
fore, not  the  reflex  of  the  currents  that  dominate  indus- 
trialism. There  is,  however,  in  this  calling  a  very  large 
and  difficult  problem.  It  arises  from  the  fact  that  the 
season  of  the  flood  delivery  of  the  result  of  our  American 
farmers'  labor  is  now  upon  us.  We  shall  have  a  large 
surplus  over  our  own  consumption — probably  between 
fifteen  and  twenty  million  tons  of  food  that  we  wish  to 
market  abroad. 

Europe  is  our  only  customer  for  eighty  to  ninety  per 
cent,  of  this  produce.  The  belligerent  countries  have,  to 
all  practical  purposes,  exhausted  their  transferable 
securities.  Their  production  of  industrial  commodities 
to  exchange  for  this  food  cannot  begin  until  they  have 
had  raw  materials.  They  cannot  obtain  raw  materials 
until  they  have  had  credits,  and  they  cannot  get  credits 
until  we  have  peace.  Therefore,  we  are  holding 'Europe 
idle  today,  we  are  preventing  ourselves  from  finding  a 

[16] 


"The  World £conomic  Situation" 

market  for  our  major  produce,  and  we  are  projecting  on 
our  agricultural  community  a  danger  that  we  must  yet 
take  into  account.  Already  we  see  the  preliminary  signs 
of  these  events.  The  drop  of  thirty-five  per  cent,  in  the 
price  of  hogs,  with  the  fall  in  corn  and  oats,  is  the  pre- 
monitory symptom,  and  the  fall  of  this  one  brick  in  a 
row  will  yet  react  in  a  hundred  other  American  products. 
Some  fall  of  price  of  foodstuffs  in  the  United  States  is 
essential,  in  justice  to  the  consumer.  No  one  will  deny 
that.  And  yet  prices  can  fall  to  a  point  that  will  do  in- 
justice to  the  producer  as  well,  and  will  curtail  our  pro-  / 
duction  for  the  next  season.  This  particular  problem  is  * 
also  complicated  by  the  fact  that  many  countries  of 
Europe  are  again  today  consolidating  their  buying 
agencies  in  the  hands  of  groups  of  governments  in  order 
to  purchase  our  food  supply  through  one  hand.  These 
consolidated  agencies  possess  a  power  over  prices  in  the 
United  States  that  requires  careful  safeguarding  from 
our  side. 

It  is  possible  that  if  we  take  no  measures  to  meet  these 
problems  of  the  agricultural  industry,  we  may  have 
economic  reactions  that  will  affect  the  entire  commercial 
community  of  the  United  States.  It  is  to  be  borne  in 
mind  that  the  wealth  of  this  country  is  sixty  per  cent, 
agricultural;  that  pur  agricultural  community  is  also  the\ 
absolute  sheet-anchor  of  stability  in  our  social  institu- 
tions and  while  we  pray  for  lower  prices  we  must  have  an-* 
equal  regard  for  justice  to  the  American  farmer,  not  only  in 
his  interest  but  in  the  interest  of  the  entire  community. 


Address  of  MR.  HERBERT  HOOVER 

While  on  agricultural  subjects,  a  word  for  the  con- 
sumer may  not  be  amiss.  We  hear  a  great  deal  of  justi- 
fiable complaint  of  speculation  in  the  primary  necessities 
of  life.  There  have  been  many  men  who  have  taken 
unjustifiable  advantage  of  the  terrible  economic  disrup- 
tion of  the  last  twelve  months.  Some  of  this  speculation 
has  been  of  an  absolutely  vicious  order.  By  viciousness, 
I  mean  men  who  give  no  service  in  distribution,  who 
have  bought  food,  the  prime  necessities  of  life,  with  a 
view  to  lifting  their  price  out  of  the  community.  But  the 
great  rise  in  prices  this  last  seven  months  since  the 
demobilization  of  the  Food  Administration  has  been  due 
to  other  causes  entirely.  These  causes  are  world-wide, 
and  they  lie  generally  in  the  anticipation  that  was  held 
by  the  whole  food  producing  and  food  marketing  world, 
that  with  the  opening  of  two  hundred  million  customers 
in  Central  Europe,  there  would  be  a  demand  of  such 
dimensions  as  to  make  a  world  shortage.  Therefore, 
there  was  a  large  amount  of  buying,  a  large  amount  of 
withholding  from  the  market,  of  what  one  may  term  a 
protective  order,  not  with  a  view  of  speculating  against 
the  community,  but  of  safeguarding  supplies.  Even 
governments  have  been  engaged  in  this  operation.  To 
put  it  in  another  way,  many  people  have  been  increasing 
their  stocks  out  of  a  fear  that  there  would  be  a  scarcity 
before  the  year  was  over.  Thus  we  are  able  to  witness 
that  before  the  beginning  of  the  present  harvest  we  had 
larger  stocks  of  food  of  many  kinds  in  our  public  ware- 
houses than  we  have  had  at  any  time  during  the  past 

['8] 


"The  World  Economic  Situation" 

five  years.  Two  conclusions  can  be  drawn  from  this: 
one  is  that  we  did  not  over-export  foodstuffs  from  the 
United  States  during  the  past  year;  the  other  is  of  more 
importance,  and  that  is  that  with  these  accumulated 
stocks,  and  probably  the  largest  harvest  that  we  have  ever 
had,  we  have  ample  supplies  to  carryover  the  next  year. 

The  demands  from  Central  Europe  will  never  amount 
to  the  creation  of  such  a  shortage  as  has  been  anticipated 
by  the  food  trades,  and  the  public  may  yet  score  off  the 
speculator.  While  Europe  needs  and  will  import  most  of 
our  surplus  during  the  year,  if  they  can  find  credits  with 
which  to  buy  it,  it  has  not  the  resources  to  import  one 
atom  more  than  is  absolutely  necessary  to  preserve  life, 
and  there  is  no  justification  today  for  the  anticipation  of 
any  over-demand  upon  the  United  States  during  the 
next  twelve  months.  There  is,  however,  ample  room  for 
anxiety  that  in  the  next  five  months  of  our  maximum 
production,  through  the  delays  in  peace  and  in  the  set- 
ting up  of  credits,  Europe  will  not  be  in  a  position  to 
purchase  her  customary  food  supplies  during  the  time  of 
our  high  production,  and  that  it  is  now  time  for  us  to  dis- 
play some  interest  in  what  will  happen  to  our  agricultural 
producers  when  our  warehouses  become  overcharged. 

There  is  one  general  fault  with  food  prices  in  the 
United  States,  and  that  is  the  ex^ensivejjessjrfo^  tf 

tribution  system.  The  margins  between  the  farmer  and 
the  consumer  are  larger  in  this  country  than  in  any  other 
country  in  the  world,  even  eliminating  the  whole  ques- 
tion of  speculation.  The  whole  distribution  system  needs 

[19] 


^Address  of  MR.  HERBERT  HOOVER 

a  careful  analysis  and  study  and  some  form  of  deliberate 
remedy.  Such  remedies  do  not,  however,  take  the  form 
of  governmental  interference  except  against  monopoly 
and  vicious  speculation.  It  would  be  amiss  if  I  did  not 
mention  that  there  are  some  articles  in  the  world  today 
of  which  there  is  an  actual  world  shortage.  On  some 
textiles,  clothing  material  and  a  few  food  stuffs,  such  as 
sugar  and  coffee,  and  a  few  items  of  that  character,  the 
price  level  is  a  level  based  on  shortage.  Nothing  will 
permanently  correct  such  price  levels  but  an  increase  in 
production  or  a  decrease  in  consumption,  and  a  con- 
tinued decrease  in  production  in  the  manufacturing 
community  can  only  tend  to  lift  the  whole  list  of  these 
prices  higher. 

Now,  these  are  a  few  of  the  problems  that  demand 
immediate  consideration  in  the  nation.  There  are  others 
that  I  could  impose  on  you  for  some  hours. 
f  But  we  do  need  the  deck  cleared  of  this  peace  question 
/and  of  politics,  while  we  bring  to  bear  the  great  intel- 
Uigence  of  this  country  on  its  solution.  These  things  mean 
Wore  to  the  welfare  of  our  people  and  to  the  world  than 
even  the  League,  great  as  I  believe  its  aspirations  and 
its  purposes  are.  We  have  spent  two  years  in  war,  and 
we  have  spent  a  year  making  peace,  and  now  let  us  have 
a  year  in  economics,  in  order  that  we  may  not  find  our- 
selves in  a  worse  plight  than  we  were  before  we  entered 
upon  it.  (Applause.) 

Mr.  Whitton:  I  propose  three  cheers  for  Mr.  Herbert  Hoover. 

(Cheers]. 

[20] 


AN  INITIAL  FINE  OF  25  CENTS 

WILL  BE  ASSESSED  FOR  FAILURE  TO  RETURN 
THIS  BOOK  ON  THE  DATE  DUE.  THE  PENALTY 
WILL  INCREASE  TO  SO  CENTS  ON  THE  FOURTH 
DAY  AND  TO  $T.OO  ON  THE  SEVENTH  DAY 
OVERDUE. 


DEC  ?2  1942 


' 
DCT24 


*l 


fO 


LD  21-100m-7,'40 (6936s) 


Binder 
Gaylord  Bros.,  Inc. 

Stockton,  Calif. 
T.M.  Rea- U.S.  Pat.  Off. 


U.C.BERKELEY  LIBRARIES 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


